ruag reports growth in sales and order backlog but lower profit

March 23, 2018

With net sales of CHF 1,955 million (previous year: CHF 1,858 million), RUAG once again topped its record prior-year performance – this time by 5.2%. However, the international technology group was unable to uphold last year’s record result. Earnings before interest and taxes (EBIT) fell to CHF 119 million (CHF 151 million) and net profit to CHF 89 million (CHF 116 million). The order backlog at the end of 2017 was a high CHF 1,607 million (CHF 1,556 million). RUAG is proposing that a dividend of CHF 40 million (CHF 47 million) be paid to the Swiss Confederation.
Founded 20 years ago, RUAG has been successfully transformed from a domestically oriented armaments company to an international technology group. In 2017 around 56% (57%) of RUAG’s contracts were in the civilian sector, and 62% (63%) of its net sales came from outside Switzerland. Overall, the Group generated net sales of CHF 1,955 million, representing an increase of CHF 97 million or 5.2%. Alongside organic growth, international acquisitions such as Clearswift also contributed to this further increase. EBIT and net profit declined by CHF 32 million and CHF 27 million respectively. All divisions except for the Defence Division returned a profit. The order backlog rose overall to CHF 1,607 million (CHF 1,556 million) while new orders declined to CHF 1,961 million (CHF 2,036 million). Both numbers indicate once again that there is a sound basis for the further development of the business.
At the Annual Press Conference, RUAG Group CEO Urs Breitmeier had the following to say: “It is gratifying that growth has remained strong. However, profitability decreased because of a number of isolated events. These relate in particular to restructuring in the Land Systems area, to a reassessment of costs and earnings in various projects in the Defence Division, to the delayed delivery of aerostructure components by subcontractors and to a decline in sales of ammunition for sporting marksmen and -women in the USA. Appropriate action has been initiated in all areas and corrective measures taken.” The result was additionally impacted by planned set-up costs at the new production facilities in the USA and Hungary.
RUAG is facing new challenges: according to a resolution passed by the Swiss Federal Council on 21 March 2018, RUAG is to be split into two autonomous group companies. One of these companies (working title: RUAG Switzerland) will concentrate on performing services for the Swiss armed forces. All other business activities (services in the civil sector and in the international defence market) will be amalgamated in a second group company (working title: RUAG International). RUAG will retain its growth strategy focusing on Space, Aerostructures and Cyber Security. However, thought will be given to a further shift of emphasis towards digitalization and to giving the Group the same ground rules as its competitors. The Board of Directors will examine various options for the future development of “RUAG Switzerland” and “RUAG International” which will then be submitted to the Federal Council.